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 Text | Internal Reference Jun Ripple, the world's third largest digital currency, is currently suffering from a six-month-long lawsuit. Bradley Sostack, the lead plaintiff in the Ripple case, filed a lawsuit accusing the company of selling XRP to retail investors as an unregistered security. Looking at the price trend of Ripple in the past year, while all major mainstream cryptocurrencies have made gains, Ripple has fallen by 28%. It has really disappointed many investors, and it’s no wonder some investors want to sue it. Ripple's legal team pointed out that if Ripple's classification is redefined, it will not only threaten the utility of XRP as a currency, but it will also subvert, threaten or destroy the established broader XRP market, and even harm the interests of thousands of XRP holders around the world. Ripple has been hit with class action lawsuits one after another According to news on August 14, 2019, a group of XRP investors filed a new lawsuit against Ripple on August 5. It said the company’s tokens are unregistered securities under the guidance of the U.S. Securities and Exchange Commission (SEC). This is the latest development in a year-long lawsuit against Ripple, but this time the plaintiff cited the SEC’s newly released “Digital Asset ‘Investment Contract’ Analysis Framework” and attempted to define XRP as an illegal unregistered security under that framework. In May, June, and July of this year, Ripple was sued by XRP investors three times in a row. In May 2018, XRP investors filed a class action lawsuit against the cryptocurrency company Ripple, claiming that the company violated state and federal securities laws. Investors believe there is a direct connection between Ripple and XRP. What's the reason this time? The new filing also claims that Ripple violated California’s False Advertising and Unfair Competition Act by allegedly “obscuring the differences between Ripple’s enterprise solutions and XRP to further drive demand” and “listing XRP on payment exchanges and limiting the supply of XRP to drive demand,” among other claims. The plaintiff launched a class action lawsuit on behalf of all XRP investors, hoping that the court would determine that XRP is a security and compensate the plaintiff and investors for the losses they suffered. It is reported that the lawsuit update on August 5, 2019 is an important supplement to the lawsuit claims in May 2018. Investors believe that whether XRP is defined as a security should refer to the "Digital Asset Investment Contract Analysis Framework" just released by the SEC in April 2019. Although this framework is only a non-legal guidance framework, the court should rely on the Howey test results mentioned in the framework as an important reference. In addition to asking the court to refer to the Analytical Framework for Digital Asset Investment Contracts, the supplement also raises the case that Ripple violated California’s False Advertising and Unfair Competition Laws by making deceptive representations about the origin, circulation supply of XRP. Investors claim that buying XRP requires Bitcoin or Ethereum, that XRP buyers have invested funds in a common enterprise, that XRP investors have reasonable expectations of profits, and that the success of XRP requires the efforts of Ripple and others, which fully meets the above criteria. At the same time, according to the Howey test, XRP should be considered a security if it involves investment and has reasonable profit expectations. At the time, Ripple’s head of corporate media, Tom Channick, denied this view, saying that it would be up to the U.S. Securities and Exchange Commission (SEC) to decide whether XRP is a security, but we still believe that XRP should not be classified as a security. Finally, the investors asked the court to support the lawsuit as a class action and determine that XRP is a security. The defendant's unregistered sale of XRP violated applicable laws and award damages to the plaintiff and other members. It is reported that this is the third class action lawsuit Ripple is currently facing. The first two lawsuits alleged that XRP (ripple currency) is a security. A third class-action lawsuit is now filed against Ripple Inc., claiming that XRP’s centralized status and mining-less supply model gave Ripple Labs Inc the opportunity to have a never-ending ICO period. This resulted in Ripple raising nearly $100 million in the XRP sale. According to Coinmarketcap data, XRP ranks third in the cryptocurrency market capitalization rankings, second only to Bitcoin and Ethereum. The total market capitalization reached US$12.6 billion, accounting for 4.4% of the total market capitalization of the entire cryptocurrency market. If XRP is eventually recognized as a security, it will most likely be banned from sale, Ripple will also face sky-high fines, and the entire cryptocurrency market will face turmoil. Is XRP a security? In fact, whether XRP is a security has always been a focus of debate. It is understood that Jay Clayton, chairman of the United States Securities Exchange Commission (SEC), said in an interview that with the exception of digital currencies like Bitcoin, all other cryptocurrencies are securities. And reiterated in a public forum: Most of what I see in the ICO field are securities. Among them is XRP. Faced with this problem, Ripple CEO Brad Garlinghouse has also stated in public many times that XRP is not a security. He said, “XRP is not a security for three reasons: If the company Ripple failed tomorrow, the XRP ledger would still be going on ； XRP is an open source, distributed technology ； If you buy XRP, you are not buying Ripple stock - buying XRP does not give you ownership of Ripple." In a recent interview with the media on January 14, Heath Tarbert, chairman of the U.S. Commodity Futures Trading Commission (CFTC), suggested that the U.S. Securities and Exchange Commission (SEC) classify Ripple (XRP), the cryptocurrency with the third largest market capitalization, as a security. However, Heath Tarbert also specifically stated that the situation is still not clear, and Ripple may still be regarded as a commodity and fall within the jurisdiction of the U.S. Commodity Futures Trading Commission. To explain further, Heath Tarbert added: "Part of the problem is that the CFTC and SEC, while they share some jurisdiction, also have separate territories. If it is a security, jurisdiction lies with the U.S. Securities and Exchange Commission ； If it is a commodity, it falls under the jurisdiction of the U.S. Commodity Futures Trading Commission. So over the past year, we've actually been working very closely with the SEC and considering where that regulatory framework falls for specific products. ”Always give ambiguous statements? According to Heath Tarbert, Bitcoin (BTC) and Ethereum (ETH) are the only digital assets under the jurisdiction of the U.S. Commodity Futures Trading Commission. The U.S. Commodity Futures Trading Commission allows the futures market to develop appropriately, giving investors the opportunity to safely purchase either of the two digital assets recognized as commodities. Ripple CEO Brad Garlinghouse said in an interview that I think it is clear that XRP is not a security. 1.XRP exists independently of the company Ripple. If the Ripple company shut down tomorrow, the XRP ecosystem would continue to exist. This is an independent open source technology. 2. Garlinghouse pointed out that XRP holders have no ownership rights in Ripple, which is a private company. 3. Ripple has clearly stated many times that XRP is not an investment tool. Instead, it is a digital asset that institutions can purchase to complete international fund transfers. According to Garlinghouse, this does not fit the characteristics of a security. XRP has many practical functions, which are very different from the concept of security. The XRP market worth hundreds of billions of dollars is affected At present, whether XRP is a security or not has yet to be clearly defined by relevant agencies. Why does Ripple CEO strongly reiterate that XRP is not a security? What will be the impact if it is defined as a security? If it is a security, then cryptocurrency exchanges in the United States must be registered with the U.S. Securities Exchange Commission (SEC) before they can trade. However, most exchanges are currently unregistered. What should I do? The first is a huge fine, and then the relevant currency transactions will be delisted. Only after the exchange has completed all procedures and complied with the regulations can it continue to be listed for trading, and it must act under the regulations of the SEC in the future. As a result, it will inevitably put pressure on currency holders and cause panic, which may lead to selling or even a stampede in the short term. Therefore, this class action lawsuit against Ripple will have two results: One, if XRP is a security, the lawsuit against Ripple will succeed, which is a major blow to XRP on a global scale. Alternatively, if not, Ripple will continue to be successful in the market and more businesses or individuals will adopt XRP. The latest news is that according to the civil meeting minutes of the U.S. District Court for the Northern District of California, Ripple’s motion to dismiss the XRP securities lawsuit has been submitted, and it may take days or even weeks for the judge to announce a verdict on the motion. Both parties to the XRP securities lawsuit will have to wait a little longer to find out whether the lawsuit will continue. Ripple Labs reportedly filed a motion to dismiss the putative lawsuit because it was filed after the three-year statute of limitations. However, Bradley Sostack, the lead plaintiff in the case, did not accept Ripple's attempts to dismiss the case, claiming that despite the statute of repose argument, Ripple was still responsible for its illegal sale of XRP tokens. A judge is considering Ripple’s motion to dismiss a widely publicized lawsuit against the San Francisco startup. Ripple claims that XRP is not a security and says these claims are unfounded. The company also stated that any lawsuit filed over the issue would violate the statute of limitations and must be filed within three years of XRP’s initial issuance in 2013. Sostack’s legal team argued that the fact that Ripple continued to sell digital assets invalidated the statute of limitations. Now, new court documents reveal that Ripple is also claiming that classifying XRP as a security could disrupt the entire market for the third-largest cryptocurrency. The company's legal team filed a motion to dismiss the lawsuit saying, "If (Sostack) is allowed to belatedly challenge XRP's classification, it will not only threaten XRP's utility as a currency, but it will upend and threaten to destroy the established XRP market more broadly, one that has involved more than $500 billion in transactions over the past two years, potentially wiping out the interests of thousands of XRP holders around the world." ” Jake Chervinsky, general counsel for cryptocurrency lending platform Compound, said it’s unclear how long the judge will take to consider Ripple’s motion. But he warned that could take a while. She said: "As usual, the judge 'accepted the complaint', which means she will make a written ruling at a later date. It could be days, weeks, or months. There is no time limit. The motion will remain on the docket forever. It will appear in a report to Congress on the state of the federal judiciary in about six months, but even then it could remain on the shelf. ” Text | Internal Reference Jun Disclaimer: This information should not be relied upon for making investment decisions, nor should it be construed as a recommendation to engage in investment transactions. Trading digital assets involves significant risks and may result in the loss of your invested capital. You should therefore ensure that you fully understand the risks involved and invest with caution. "Chain Internal Reference" is only responsible for sharing information and does not constitute any investment advice. All investment behaviors of users have nothing to do with this site.           |
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